Tag: Prof Note

8 November 2018

 

Question: According to MSN: Money, what are 10 things you need for lifelong financial success?

 

Women and minorities dominate as Goldman picks small cadre of partners – Pg. 1

–        …named 69 new partners yesterday

–        The biennial round comes as Goldman is battling one of the most serious reputational crises of its history, with a criminal indictment from the Department of Justice implicating one former and one current partner.  Alongside salaries of at least $950,000 and access to special investment funds, the rank is supposed to guard the bank’s standards

–        Women…made up 26% of the promoted class, …while younger “millennial” staff represented 29%

–        The class is smaller than the 84 appointed in the last round in 2016…

–        Traders also did well, accounting for 28 of the appointees,…

 

San Francisco backs homelessness tax – Pg. 4

–        The levy…was designed to raise between $250m and $300m from big businesses with headquarters in the city.  The tax would boost city spending on homelessness by as much as 80%

–        Some local entrepreneurs and investors argue that the tax, averaging 0.5% on the gross receipts of businesses with revenues of more than $50m, will be a particular burden on lossmaking tech companies as well as those with low-margin business models

 

Murkier outlook the only certainty of US midterms – Pg. 19

–        Initial investor reaction …. Was sanguine

–        …the outcome sets up a two-year period before the 2020 presidential election that is likely to be less straight-forward for markets than the first two years of the Trump presidency that saw US stocks set new record

–        A divided Congress arrives against a backdrop of tighter monetary policy and concerns that economy growth has peaked

–        Historically, stocks rally after mid-terms as both investors and policymakers move on from the uncertainty over its outcome.  This year’s voting followed a bruising period for US stocks – the S&P 500 fell nearly 7% in October for tis worth month since 2011

–        This time around, investors will take their cue from the US Federal Reserve, trade talks with China and the health of the US economy and corporate America, as a divided Congress diminishes the prospects for further fiscal stimulus

–        A drop in corporate tax rates has helped to power back-to-back quarters of earnings growth surpassing 20% in 2018, a hurdle that will be hard to eclipse next year, and economists have trimmed their forecasts for US economic growth in 2019

–        The outlook for an infrastructure package is more mixed

–        Trade tensions with China remains a major concern for the market and an embattled Trump administration could decide to double down on the electorate-pleasing measures against Beijing – especially as battle lines for the 2020 elections start to firm

 

Answer: (1) A fee-free checking account (Prof Note: NEVER pay bank fees!  I just got off the phone with my bank over a $72 overdraft fee (they are refunding it).  Yes, I absolutely overdrew an account (I have 30+) due to timing of payments BUT the credit line should have kicked in with no fee.  Interest is a cost of doing business; a fee is grand larceny! J); (2) A debit card (Prof Note: I have NEVER had a debit card in my life.  Why have one?!); (3) A high-yield savings account; (4) Health insurance and a health savings account; (5) Homeowners or renters insurance; (6) Auto insurance; (7) Disability insurance; (8) Life insurance; (9) A retirement fund; (10) A college savings account

5 November 2018

 

Question: According to MSN: Money, how do you plan financially for the holidays .. and after?

 

General Electric finance division calls time on commercial paper borrowing – Pg. 1

–        GE’s financial services division is giving up on using commercial paper, in a landmark moment for a business that was once the largest borrowing in the market

–        GE Capital’s move away from commercial paper – debt with a  maturity of up to 270 days – is likely to increase its cost of financing, which is also under pressure from credit rating downgrades

–        Before the 2008 crisis, GE Capital boasted of being the largest borrowing in global commercial paper markets, using them to support operations such as consumer credit, mortgages and industrial lending.  At the end of 2008 it accounted for about 4% of all commercial paper outstanding in the US

–        The company is instead becoming more reliant on bank lending

–        GE’s financing costs have also been hit by its worsening credit rating

 

Buffett’s $1bn buyback points to dearth of attractive deals – Pg. 13

–        The buyback, it’s the first in six years, represents a tiny fraction of the conglomerate’s $104bn cash pile and comes as Berkshire’s takeover drought stretches to nearly a third full year

–        Some $3.5tn of acquisitions have been agreed this year, up more than 30% from a year earlier,…

–        If nothing less, the value at which Berkshire repurchased its shares indicates what Mr Buffett and vice-chairman Charlie Munger believe the company’s stock is worth.  In the third quarter, the average price it paid for its class A shares was $312,807, …

 

Answer: (1) Slow down – Remember that doing less is an option (Prof Note: Is there anything really better than being toasty in front of a roaring fire, with the house decorated for the holidays?!); (2) Budget – Start early (Prof Note: Think Origami!  Who does not love origami?!); (3) Adjust spending – Don’t go overboard on gifts (Prof Note: It is truly the thought that counts.  I love my $20 Stanley Thermos from my Aunt.  I look like a real construction person!); (4) Kids’ gifts – Remember that little ones aren’t brand snobs; (5) Suggest a family gift exchange; (6) Plan meals well in advance; (7) Artisnanal gift – Make things at home (Prof Note: See #2 Prof Note); (8) Use points – Credit card rewards can be used for gifts; (9) Travel cheap – Book flights early; (10) Beware of temptations – Shop for gift, not yourself; (11) Potluck – Cook as a team; (12) Organize group volunteering instead of holiday parties (Prof Note: I remember working at one company and they literally made us repaint a homeless shelter for a day.  My fellow analyst and I did the math.  We begged to donate our salary to painters (which were 18% of our cost, i.e. they could have two real painters for a week rather than us two chuckleheads for a day) rather than go ourselves.  We actually liked our jobs and quantified the benefit of monetary philanthropy!  We lost, ended up painting for the day, complained the entire time, and our collective boss said, “Never AGAIN!”); (13) e-cards – Save on postage by using MailChimp (Prof Note: Ohhh…puuullleeezzzzz…this is cheap even for me.  Splurge on the car and postage.  Tell me how much you love me, as I love all of you!); (14) AliExpress – Buy from China; (15) Plan for next year – Open a holiday savings account

3 November 2018

 

Question: According to MSN: Money, what are 12 signs you are financially ready to quit your job?  (Prof Note: Look at this better as what 12 requirements must you have to ensure you are ok with a termination/reduction in force, etc)

 

Jobs data offer poll boost for Trump – Pg. 1

–        Non-farm payrolls rose by 250,000 in October, eclipsing economists’ estimates for a gain of 190,000, …

–        Average hourly earnings rose 3.1% year on year, the highest rate since April 2009

–        Yesterday’s data are likely to strengthen the Federal Reserve’s determination to continue lifting interest rates, a policy vociferously opposed by the president.  The US central bank is widely expected to raise rates by another quarter-point in December, with further upward moves possible in 2019

 

US exempts eight countries from Iran sanctions to keep oil prices in check – Pg. 1

–        The US will allow eight countries to import limited amounts of Iranian oil even after it reimposes sanctions on Monday, damping fears about a supply shortage and sending crude to its lowest price in three months

 

Bond funds hit by biggest monthly withdrawals in almost three years – 13

–        Bond ETFs have become popular with investors on the lookout for cheap, simple ways to get exposure to fixed income markets.  But the deepening bond reversal led to the first monthly outflow in two years, …

–        Bond funds around the world saw $36bn pulled out in the month to Wednesday, the biggest withdrawal since December 2015,…

–        Within the broad bond fund category, US bond funds suffered net outflows of more than $13bn while political and economic uncertainty helped to drive $9bn from Europe-focused funds

–        The fixed income ETF has now lost amost 8% of its value this year and is on track for its worst year since its inception in 2002

 

Answer: (1) You have a plan once you quit your job (Prof Note: You should always have a plan for a job loss); (2) You understand the fine print in your job contract (Prof Note: This should have occurred prior to signature); (3) You’ve prepared your resignation and resume (Prof Note: Resume should be up-to-date ALWAYS); (4) You know the details of your last paycheck (Prof Note: You should know the details of EVERY paycheck); (5) You’ve saved money for future business endeavors; (6) You’re able to travel (Prof Note: The best holidays are those between jobs as least responsibility); (7) Your debt is manageable (Prof Note: Your debt should ALWAYS be manageable); (8) You’ve addressed issues with your credit score (Prof Note: Negotiate credit lines; mortgages, etc while you have a job (if possible)); (9) You know your monthly expenses (Prof Note: You should ALWAYS know your monthly expenses); (10) You’ve accounted for costs covered by employer; (11) You have a robust savings (Prof Note: I am not a fan of spending principal.  Do the hustle!); (12) You’ve locked in another source of income (Prof Note: You should always have other income sources unless precluded by corporate policy.  And, then, if precluded, the parachute must be substantial enough to accept the risk.  Do the hustle!)

29 October 2018

 

Question: According to MSN: Money, what are six (6) things you should know about a stock market correction?

 

Banks urged to ready for no-deal Brexit – Pg. 2

–        …lenders should not expect regulators to help them cope with any upheaval caused by the UK’s departure

–        …banks should not expect any leeway in meeting a key regulatory standard set by the agency

–        If Britain leaves the EU without an exit deal, bank bonds issued under UK law will no longer be eligible as MREL unless banks insert contractual clauses to make clear that the SRB can wipe out the securities.  Failing this, banks could issue extra debt to meet their target

 

Cornell halts China university ties over student crackdown – Pg. 4

–        Cornell University in the US has suspended two academic exchanges and a research programme with China’s Renmin University because of concerns over academic freedoms.  It is the first time in years that a foreign university has halted a partnership with a Chinese counterpart for such reasons

 

US retail rents pushed to post-crisis highs – Pg. 16

–        Landlords have pushed rents for US retailers to post-crisis highs in spite of the competitive onslaught from Amazon, with asking figures in hotspots rising beyond 10% in the past year

–        The 4% average rise, to be disclosed by CBRE, the property broker, this week, is the latest sign that confidence in bricks and mortar stores is recovering, especially in better-off areas, ahead of the Christmas season

–        Supply has begun to tighten even in shopping malls, a sector particularly hard hit by closures among anchor tenants such as Macy’s and JCPenney

–        The proportion of mall units vacant or coming up for lease declined for the first quarter in seven to 5.8%

–        Miami breached the $30 per square foot level in the third quarter, up 14% form a year ago.  Average asking prices for retailers rose 13% in booming Oakland, California, and 12% in Jacksonville, an emerging financial centre in Florida

–        Nationally, the rate of year-on-year growth cooled from 5% in the second quarter

–        Limited new supply is also making it harder for retailers to secure units in popular markets.  Fewer than 6m sf of retail space was built in the third quarter, a new post-crisis low and a decline from 42m in the same period in 2007

 

Answer: (1) Stock market corrections happen often; (2) Stock market corrections rarely last long; (3) We can’t predict what will cause a stock market correction; (4) Stock market corrections only matter if you’re a short-term trader (Prof Note: Absolutely UNTRUE!  For example, if one’s portfolio is collateralizing a loan that is callable based on portfolio value, a correction could be very concerning); (5) They’re a great time to buy high-quality stocks at a bargain; (6) They’re also a good reminder to reassess what you own